I am “pushing 60” yet it is so engrained in me, that I still refer to my elders as "Mr. ________ or Mrs._________. I understand that times change, but respect and common courtesy should not. And what is that old saying about familiarity breeding contempt?
I notice that Americans who post here are in general much more formal than I am used to people being in the UK. I get the impression that America is a much more hierarchical and deferential society than I am used to in Britain, which is now largely informal and egalitarian.
I remember one contributor here saying that she has a nephew whom she addresses as “Dr __________” as a mark of respect for his being a physician. That would never happen in the UK. I do know of somebody who expected his children and grandchildren to address him as “Dr __________” on account of his having a PhD, and after he was knighted by the Queen expected them to address him as “Sir __________”, but he was widely ridiculed as pompous and self-important.
In Britain today first names are the norm. I think one exception is that physicians are often still known as “Dr __________” simply to indicate what their job is and, even more so, surgeons are almost always addressed as “Mr __________” or “Miss __________” to emphasise that they are surgeons and not to be confused with physicians (confusingly, however, dental surgeons are now almost universally known as “Dr __________”, while gynaecologists are often known as “Mr __________” or “Miss __________”). Other than that I think that the only occasions on which I now routinely use a more formal mode of address are writing to a member of Parliament or if I am writing a letter that is essentially a complaint, in which case it seems disingenuous to use somebody’s first name. I would always address a lawyer, for example, by his or her first name (unless I were actually in court!), and I think it would be considered strange to do otherwise.
Therefore, I personally find there to be nothing particularly strange about a priest wishing to be addressed by his first name. I have only once in my life met a cardinal, but he introduced himself to me by his first name only. He didn’t even make clear that he was a cardinal, and as he was in religious habit I could easily have mistaken him for an ordinary monk had I not known who he was. I think that it would actually have been quite rude to have replied, “How do you do, Your Eminence?” The former archbishop of Canterbury Rowan Williams used to prefer to be called “Rowan”, or if people were for some reason uncomfortable with that, “Archbishop”. He used to think it quite a joke if somebody called him “Your Grace”.